I'm by no means an expert on this but this is how I look at what your dilemma is in an explanation form. There are formula's for it,which I don't know but I just use my own calculations. I will leave that to someone else to show the formulas.
The options have an expiry of AUG 2012 with an option conversion price of 20c. With the current price of options at 23c + the conversion price of 20c you are looking at a complete outlay of 43c if you wish to convert the options. This is a 6c premium to the current share price which I look at as the amount you are paying for the time (expiry in AUG 2012, so approximately 18 months). So realistically you need the share price to rise to 43c to break even.
So for your $2000 you get 8695 options or 5405 shares.
Remembering 43c is your break even share price for your options, if you bought shares and the price rises to 43c(from current 37c) then you are $324.30(6 x $54.05) ahead on shares.
Now comes the interesting part, if you take out any factor/premium for time, when the share/options rise, for every 1c that the share price goes up over 43c you will get back $86.95 for your options and $54.05. That is a difference of $32.90 per cent. If you are ahead $324 on your shares at 43c, quick maths of $324/$32=10. So you need the share price to hit 43c+10c=53c for the options to be even with your shares.
SO to simplify, if you think MHM will be above 53c buy options.
I personally have a mixture of options and shares.
Good luck, hope this was easy enough to understand.
I appologise if someone else has answered in the meantime :)
MHM Price at posting:
37.0¢ Sentiment: None Disclosure: Held
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